Neogen — First Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Total revenue reached $222.8 million for the quarter ended August 31, 2026, representing a 6.5% year-over-year increase from $209.2 million in the prior-year quarter; core revenue growth was 8.1%.
• Food Safety segment revenue grew 7.4% year-over-year to $163.2 million, with core growth of 8.1%.
• Animal Safety segment revenue grew 4.2% year-over-year to $59.6 million, with core growth of 8.0%.
• Domestic revenue was $110.1 million and international revenue was $112.7 million.
• Gross profit was $105.5 million with a gross margin of 47.4%, compared to $95.0 million and 45.4% in the prior-year quarter.
• Adjusted Gross Profit was $110.9 million with an Adjusted Gross Margin of 49.8%, compared to $103.6 million and 49.5% in the prior-year quarter.
• Net loss was $11.9 million, or $(0.05) per diluted share, compared to net income of $36.3 million, or $0.17 per diluted share, in the prior-year quarter.
• Adjusted Net Income was $17.5 million, or $0.08 per diluted share, compared to $9.5 million, or $0.04 per diluted share, in the prior-year quarter.
• Operating loss was $1.8 million with an operating margin of (0.8)%, compared to an operating loss of $16.1 million and margin of (7.7)% in the prior-year quarter.
• Adjusted Operating Income was $36.5 million with an Adjusted Operating Margin of 16.4%, compared to $29.6 million and 14.1% in the prior-year quarter.
• Adjusted EBITDA was $41.6 million with a margin of 18.7%, compared to $35.5 million and 17.0% in the prior-year quarter.
• Cash flow from operations was $12.9 million, and free cash flow was $4.7 million.
• Non-current debt stood at $774.2 million as of August 31, 2026, down from $793.7 million as of May 31, 2026.
• Deferred revenue was $3.6 million as of August 31, 2026, unchanged from May 31, 2026.

Guidance and Future Outlook

• The company raised its fiscal year 2027 revenue guidance to a range of $885 million to $890 million, up from the previous range of $880 million to $885 million.
• The company raised its fiscal year 2027 Adjusted EBITDA guidance to a range of $181 million to $183 million, up from the previous range of $180 million to $182 million.
• Management aims to drive more consistent growth and margin expansion over the long term through strengthened commercial discipline, harmonized sales operating models, and improved inventory optimization systems.

Business Segments and Product Lines

• Food Safety revenue growth was driven by strong performance in Indicator Testing and Culture Media, including Petrifilm, and Bacterial and General Sanitation, including pathogen detection products.
• Animal Safety revenue growth was driven by strong performance in Veterinary Instruments & Consumables and Biosecurity Products, primarily from insect control products.
• The company successfully completed full validation of the first single kit unit (SKU) for Petrifilm manufacturing at its Lansing site.
• The company remains on track to manufacture saleable Petrifilm product and begin a planned multi-quarter manufacturing transition in November 2026.
• Neogen announced a strategic collaboration and equity investment in Hinalea Imaging Corp. to develop digital imaging solutions for food safety and quality inspection.
• The company continues to work toward completing the sale of its global Genomics business to Zoetis Inc., subject to customary closing conditions and regulatory reviews expected to conclude by the end of December 2026.

Market and Competitive Landscape

• The company observed double-digit growth in the Asia Pacific region.
• Core revenue growth included a benefit of approximately 3% related to inventory adjustments at certain distributors in the prior-year quarter and the timing of customer orders in the first quarter of fiscal 2027.

Risks and Challenges

• Risks include the continued integration of the 3M Food Safety business and the realization of expected benefits from that acquisition.
• Potential risks involve the relationship with and performance of the transition manufacturing partner for Petrifilm.
• The company faces risks related to recruitment and retention of key employees, competition, and geopolitical conflicts such as the Russia-Ukraine war and the conflict in the Middle East.
• Risks also include research and development challenges, intellectual property protection, increasing government regulation, and company litigation.

Management Commentary and Tone

• CEO Mike Nassif stated that the focus for fiscal year 2027 has shifted from strengthening fundamentals to scaling them to drive consistent execution, improved customer outcomes, and profitable growth.
• Management described first-quarter results as reflecting encouraging progress as organizational changes take hold.
• The tone indicates confidence in strengthening commercial discipline, rebuilding the innovation engine, and making targeted investments to enhance capabilities.

Other Key Points

• The prior-year quarter's net income was significantly impacted by a non-cash gain of $76.4 million recognized on the divestiture of the Cleaners & Disinfectants business.
• The increase in Adjusted Net Income was driven by higher EBITDA, lower interest expense, and lower income tax expense.
• The company is unable to reconcile the Adjusted EBITDA outlook to forecasted net income on a forward-looking basis due to the inherent difficulty in forecasting items such as non-cash stock-based compensation, integration-related expenses, and restructuring costs.
• Cash paid for interest was $21.5 million, and income taxes paid, net of refunds, were $2.8 million for the quarter.
• The company repaid $20.0 million of outstanding debt during the quarter.